Making Tax Digital in 2019 HMRC are Starting with VAT first

As part of our accounting services and ongoing support to you our clients we have written this communique to keep you informed about the Tax changes taking place this year. We have kept this explanation as simple as possible, tax can get complicated dependant on each companies situations.

What is Making Tax Digital?

HMRC are looking to make keeping your tax records more effective, efficient and easier to do.

HMRC website says…

Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

• more effective
• more efficient
• easier for taxpayers to get their tax right

These changes start on April 1^st 2019.

HMRC have chosen to start this modernisation process with the Making Tax Digital for VAT.

This process starts with any VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.

The next stages of Making Tax Digital will include Income Tax, and Self-Assessment. These are in development and are planned to come into effect over the next few years. We will keep you informed and up to date with these as they progress.

How will this affect my Business?

If you are VAT registered and you have a turnover above the VAT threshold, currently set to £85,000

This means you will be required to keep records digitally and use software to submit your VAT returns.

There are several software solutions you can chose to accomplish this task, we can help you select one to suit your needs.

What do I need to do?

Don’t Panic! You just need to start planning now for this process in time for the April 1^st 2019 deadline.

The simplest way is to give us a call and we can talk you through this process and your options.

These changes have been aligned with your normal VAT schedules. So as not to impact your business. The main difference is that you will be using a digital software to record and process you VAT returns. Most major accountancy software suppliers have a solution to deal with your needs and the future requirements HMRC are looking to apply later on.

We have recommended the Xero Software solution, which combines all the best features and advantages your business may need.

Again this may seem a little over whelming at first, but with our assistance we can get you through these changes, Just give us a call.